Core Systems

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Core Systems: The Foundation of Customer Experience

Many banks have been hesitant to undertake the costly process of core conversion. But experts say it is critical for banks to upgrade their core systems in order to keep up with consumer expectations and offer an optimal customer experience.

Cloud-based core systems
He also believes the cloud will play a critical role in the future of core systems upgrades. “I think the real potential [for use of the cloud in core] is in Tier 2 and Tier 3 institutions,” says Wainwright. “Morgan Stanley may not be willing to put all its customer data in the cloud, but for a lot of banks going to the core can drive simplification and efficiency.”

A cloud-based system is not only less costly in terms of upkeep. It can also be easily customized and offer a speedier time to market for new products, he notes.

Luis Martín González, managing director for Accenture Core Banking Services, believes the success BBVA Compass has seen with its core transformation may be a turning point for core upgrades in the North American market -- especially with the increased focus on delivering products and services via digital channels.

“The banks are starting to realize their core banking platforms are an inhibitor for their digital transformation,” he says. “Banks need to deliver a new customer experience similar to what consumers experience in their everyday life with companies like Amazon, Apple, and Google.”

He worked for many years in Europe on bank core transformations before coming to the US. He believes the approach taken by European banks, which often face legacy technology issues similar to those US banks face, will be favored by banks here. That, he says, is a core replacement process that favors a gradual transformation, upgrading new applications step-by-step. This is similar to the approach BBVA Compass took.

Regardless of how they do it, González believes banks in the US can’t put off core transformations any longer. “One of the things we have seen in the North American market is there is much more obsolescence in the technology than in Europe,” he says.


Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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User Rank: Author
8/20/2014 | 4:42:06 PM
Re: true across industries
Good point, I guess we'll see whether insurers will be more liekly to invest in core systems upgrades than banks in the coming years.
Nathan Golia
Nathan Golia,
User Rank: Author
8/20/2014 | 3:21:01 PM
true across industries
We see the same phenomenon in insurance. In order to get where they want to be from a customer experience and interaction perspective, insurers have to change the back-end systems that support their business for the 21st century.
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